Foreign Investment in Canadian Securities Falls Sharply in May as Equity Outflows Accelerate

Foreign investment in Canadian securities slowed significantly in May as non-resident investors sharply reduced equity holdings, although continued demand for government bonds kept overall investment in positive territory, according to Statistics Canada.

Foreign investors purchased a net C$7.9 billion in Canadian securities during the month, down from C$46.9 billion in April and well below economists’ expectations of C$15.21 billion.

The decline was largely driven by a C$16.1 billion selloff in Canadian equities, marking the largest monthly divestment since February 2025.

The heaviest equity outflows were concentrated in the energy and mining sector, which recorded C$7.7 billion in net sales, followed by the manufacturing sector, with C$4.9 billion in divestments.

Despite the decline in equity investment, foreign investors remained net buyers of Canadian securities for a fifth consecutive month, supported by continued demand for government debt.

Purchases of federal government bonds totaled C$7.8 billion, while provincial government bonds attracted C$7.1 billion in net foreign investment.

Foreign investors also increased their holdings of Canadian money market instruments by C$6.0 billion, representing the largest monthly investment in the segment since September 2025.

The increase was primarily driven by purchases of private corporate paper, which totaled C$3.7 billion, and federal government business enterprise paper, which added C$2.8 billion.

The latest data indicate that while foreign investors reduced exposure to Canadian equities, demand for government debt and short-term fixed-income instruments continued to support cross-border capital inflows.